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Inflation surprise keeps RBA rates on hold at 3.60%

Central bank takes cautious tone as inflation forecasts rise.

5 November 2025

People move through Martin Place in the CBD of Sydney. Picture: AAP Image/Nikki Short

4 key takeaways

  • The Australian economy is growing faster than previously expected.
  • Unemployment is expected to remain around its current level of 4.4% for the next two years.
  • Inflation levels are forecast to creep up. 
  • As a result, interest rates are expected remain on hold at 3.6% through 2026.

No change to cash rate and no signals on RBA’s next move

The Reserve Bank of Australia (RBA) has left the official cash rate on hold at 3.60% at its November meeting, as widely expected. The decision was unanimous, with Governor Michele Bullock confirming that no other options were discussed.

The statement issued by the RBA to accompany the decision was more cautious than it could have been given the surprise inflation result for the September quarter.

In the statement, the RBA’s board attributed the recent surprise increase in inflation partly to temporary factors, such as higher petrol prices, higher council rates and the roll-back of electricity rebates. However, CBA economists believe stronger consumer demand in areas including travel and recreation is also creating pressure for price increases.

“This is a cautious statement from the RBA, but the inflation data is still running hot,” said Belinda Allen, Head of Australian Economics at CBA.

“We expect the cash rate to remain on hold in the foreseeable future.”

RBA interest rates chart

Forecasts revised but uncertainty remains

The RBA’s updated forecasts show trimmed mean inflation – the RBA’s preferred measure of underlying inflation that “trims” away the items with the largest price changes in the period to give a better indication of price trends - peaking at 3.2% before falling to 2.6% by the end of 2027.

More broadly expectations for Australia’s overall economic output, measured by GDP growth, has been modestly upgraded for the remainder of 2025, while the unemployment rate is expected to stay at 4.4%.

The central bank remains focused on incoming data, particularly inflation, to guide future decisions.

A full monthly Consumer Price Index (CPI) report on 26 November will give an updated read on inflation trends, helping shape the December meeting. If inflation proves more persistent, the February meeting could see the RBA shift tactics.

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The information presented is an extract of a Global Economic and Markets Research (GEMR) Economic Insights report. GEMR is a business unit of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945.



This extract provides only a summary of the named report. Please use the link provided to access the full report, and view all relevant disclosures, analyst certifications and the independence statement.



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